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PumaPay is creating a Blockchain protocol which presents merchants and shoppers with a practical alternative to credit cards – arguing that cryptocurrencies have failed to become a de facto source of payment.
According to PumaPay, its system is innovative because it reverses the mechanisms of everyday transactions. Rather than the existing method of customers “pushing” funds to a merchant by making a card payment, the protocol allows businesses to pull payments from a shopper’s cryptocurrency wallet.
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The startup believes the technology behind its PullPayment Protocol is significant as it paves the way for flexible billing that was impossible on the Blockchain before – making scheduled payments for variable amounts a realistic prospect. This means anything from energy bills and magazine subscriptions to affiliate and restricted transactions could be handled alongside one-off payments.
PumaPay aims that its open-source system will be easy to use, incentivizing merchants to accept cryptocurrency and finally giving crypto holders a broad range of ways to spend their funds without the need to convert into fiat.
Putting businesses first
In its white paper, PumaPay claims there are as many as 300 different transaction fees that credit card associations such as MasterCard, Visa and American Express can impose on merchants who accept card payments. The company describes this system as “complex,” with charges that range anywhere from 3 to 8 percent of gross receipts. For shops and restaurants operating in competitive markets where one dollar can mean the difference between making a profit or loss from a sale, PumaPay claims that current solutions are “exploitative” and harmful to growth.
With society turning increasingly cashless – and the popularity and convenience of internet shopping reaching more households with every passing year – the use of card payments is rising despite these “infrastructural inefficiencies.” PumaPay says merchants also face the added danger of online fraud, as they are exposed to liability when transactions are not fully authenticated because a card is not present.
The company says its protocol helps eliminate expensive middlemen and unfair exposure to risk, all the while speeding up the reconciliation of transactions and enhancing merchant cash flow.
To help catalyse the adoption of the PullPayment Protocol, PumaPay has established partnerships with e-commerce platforms and online service providers who will become the first to introduce this payment method to their customer base. These brands – along with others that join the protocol in future – will be added onto a platform called PumaPay Pride, which helps shoppers discover places where the token is accepted.
“Greater control” for crypto holders
PumaPay says that its solution of “pulling” payments from the accounts of consumers is not at the expense of them having control over their finances. This is because all transactions need to be approved in advance, and a recurring arrangement with a merchant can be canceled at any time directly from the wallet.
The company hopes that shoppers could end up paying less for everyday items if they decide to use PumaPay, as merchants will be motivated to pass on savings further down the chain in order to encourage trade.
To demonstrate one way the PullPayment Protocol can be used in a real-world environment, the white paper uses the example of a couple paying their tab following a date. Here, the restaurant would print a QR code on the bill which can be scanned using the PumaPay wallet. The bill payer would approve the transaction and it would be written into the Blockchain – paving the way for the restaurant to pull the funds out of their account.
PumaPay’s token generation event is set to begin at the stroke of midnight on April 26, and it will last for one week.